Artificial Intelligence Drives Startup Funding in H1 2026

The first half of 2026 was significantly influenced by artificial intelligence, highlighted by startups like Neysa and Sarvam AI securing substantial funding rounds. The most remarkable news broke towards the end of this period when CRED successfully raised $900 million from Meta, the parent company of Facebook. This was soon followed by the appointment of Kunal Shah as the Global CEO of WhatsApp. Such milestones contributed to nearly $7.4 billion in startup funding, positioning H1 2026 as the second most successful first half since the funding boom of 2021 and 2022. The six-month stretch also saw D2C beauty and health brands emerging as attractive acquisition targets, as the IPO pipeline began to thrive with OYO, Zepto, Razorpay, Kuku, and Zetwerk edging closer to their market listings. Turtlemint, Fractal, Shadowfax, and Kissht also marked their presence with stock market debuts.

[Overview] According to Startup Superb’s data, Indian startups garnered around $7.4 billion in funding during the first half of 2026. This comprised 106 growth and late-stage deals summing up to $5.61 billion, alongside 445 early-stage deals valued at $1.77 billion. Additionally, 71 deals remained undisclosed during this timeframe. Six startups, namely Square Yards, Sarvam AI, Skyroot, KreditBee, Neysa, and Juspay, achieved unicorn status. In comparison, five startups accomplished this milestone in H1 2025.

[Y-o-Y and M-o-M trend] H1 2026 concluded on a stronger note than the previous two years, with startups amassing $7.39 billion, marking the highest first-half total since 2022. This achievement surpassed H1 2025’s $6.72 billion and H1 2024’s $7 billion, although it fell short of the $20 billion raised in H1 2022 and the $13 billion recorded in H1 2021. Month-on-month funding surged over threefold in June to $2 billion from May’s $630 million, following three months of decline.

[Top 10 growth stage deals in H1] A small number of significant growth stage deals dominated H1 2026, led by AI infrastructure startup Neysa, which topped the list with $1.2 billion raised. Fintech unicorn CRED followed closely with a $900 million round, while KreditBee, Rapido, and Sarvam AI completed the top five with $280 million, $240 million, and $234 million, respectively. The list also included Weaver Services, Square Yards, Arya.ag, Drivn, and Polaris, demonstrating a broad investor interest across fintech, AI, mobility, proptech, agritech, EV, and manufacturing sectors throughout the first half of the year.

[Top 10 early stage deals in H1] Early stage funding in H1 2026 showcased a robust investor enthusiasm towards AI startups, with Temple at the forefront after securing $54 million. Following closely were the AI native design platform Noon, which raised $44 million, and enterprise AI startup Hang Ten Systems at $32 million. Emversity and Pramaana Labs rounded out the top five with $30 million and $27 million, respectively. This list also featured BillionE, Deccan AI, Knight Fintech, Nava, and Tsecond.ai, with AI startups making up six of the top ten early stage funding rounds in the first half of 2026.

[Mergers and Acquisitions] M&A activity remained stable during H1 2026, driven by transactions in consumer brands, healthcare, and fintech sectors. Among the disclosed deals, L’Oréal’s acquisition of a majority stake in Bare Anatomy’s parent Innovist was reportedly valued at between $350 million and $450 million, making it the largest deal, followed by BillDesk’s intended acquisition of Worldline SA’s India business for $70.8 million. The D2C beauty and consumer segment observed notable consolidation, with Marico acquiring 60% of Cosmix for $42 million, Emami taking a 60% stake in InCut Digital for $32.1 million, and agreeing to acquire Axiom Ayurveda for $26 million, while Honasa acquired a 58% stake in Fluence Pharma for $13.5 million. The healthcare sector also remained dynamic, as Innovaccer, Vaidam Health, MedGenome, CureBay, and Care.fi expanded through acquisitions, indicating ongoing consolidation in healthtech and healthcare services.

[City and segment wise deals] Bengaluru emerged as the leading startup hub in H1 2026, attracting $3.8 billion across 287 deals, accounting for 51.45% of total funding during this period. Mumbai came in second with $1.96 billion raised from 72 deals, followed by Delhi NCR, securing $984.56 million across 148 deals. Hyderabad and Chennai recorded $173.45 million and $154.93 million, respectively. Collectively, these five startup hubs made up over 95% of total funding acquired in H1 2026. AI stood out as the most funded sector, drawing $2.07 billion through 99 deals, which represented 27.95% of the total capital raised during this timeframe. Fintech followed closely with $1.91 billion from 63 deals, making up 25.89% of overall funding. E-commerce and healthtech secured $436.47 million and $406.61 million, respectively, while deeptech startups attracted $147.22 million through 40 deals. Combined, AI and fintech contributed to over half of the startup funding amassed during the first six months of 2026.

[Stage wise deals] Series B funding dominated H1 2026, attracting $2.54 billion through 57 deals, accounting for 34.42% of the total capital raised during the period. Series A followed with $1.03 billion from 127 deals, while seed-stage startups received $483.94 million across 202 deals, marking the highest deal count among all funding stages. Pre-Series A rounds generated $175.17 million across 64 deals, while pre-seed startups accumulated $41.31 million through 79 deals. This data suggests that investors continued to invest larger amounts into relatively mature startups while maintaining an active presence in early-stage funding.

[Layoffs, shutdowns and departures] Layoffs persisted within the startup ecosystem during H1 2026, impacting nearly 2,500 employees across private startups. This figure increases to over 3,600 when including listed companies such as Freshworks and Ola Electric. Livspace reported the most significant workforce reduction among private startups, laying off 1,000 employees, followed by Innovaccer (340), Flipkart (300), and Zupee and Adda247, both of which laid off 200 employees each. Other startups, including Dream Sports, Pocket FM, 91Trucks, Acko, SuperOps, and Apna Mart, also reduced their workforce in the initial half of the year. Additionally, at least nine ventures ceased operations across various sectors including AI, fintech, media, commerce, and D2C. Leadership turnover remained high across the startup sphere, with 54 senior-level departures recorded during this period. Meanwhile, startups made 194 key leadership appointments, which included Kunal Shah as the Global CEO of WhatsApp, Amit Nanda as the CEO of BigBasket, Kiran Mani as APAC Head at OpenAI, Kulmeet Bawa as Managing Director of ServiceNow India, Sameer Gandhi as CFO of Cashfree Payments, Deepak Rastogi as CFO of Ola Electric, Anup Purohit as Strategic Advisor at Neysa, and Ankit Sood as CEO of NimbusPost, among others.

[Q1 vs Q2] [Trends in H1 2025] Debt platforms inch closer to public markets: The IPO pipeline for digital lending platforms gained traction as Kissht completed its stock market listing, while Moneyview and Fibe submitted their DRHPs. These developments position debt-focused fintechs as potential candidates for public markets.

Delhi EV policy favours electric two-wheeler adoption: Delhi’s new EV policy is anticipated to expedite adoption of electric two-wheelers through purchase incentives, enhancement of charging infrastructure, and a phased shift to EV-only registrations for new two-wheelers from 2028. This policy could favour manufacturers like Ather Energy, Ola Electric, and Ultraviolette.

Salon services emerge as the new startup battleground: Salon services have surfaced as a new focal point for startups. New initiatives from Snabbit and NoBroker, along with funding for established salon chains like Bodycraft, reflect escalating investor interest in tech-enhanced beauty and personal care services.

Leadership transitions reshape startup ecosystem: The year witnessed numerous high-profile leadership exits and transitions including Kunal Shah at CRED, Hari Menon from BigBasket, Prabhjeet Singh from Uber India and South Asia, Akash Dongre from Indus Appstore, and Deepinder Goyal and Nandan Reddy from Eternal. These changes indicate a broader leadership transition across India’s startup ecosystem.

Jio IPO could enhance sentiment for tech listings: The projected Jio IPO is expected to be among India’s most significant public offerings. A successful launch could attract global investors, set new valuation standards for technology firms, and encourage more startups to explore public listings.